The better Return alternative

The better Risk-adjusted alternative

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Industry Sub-sector

The Warren Machine is an investment metric to identify quality stocks. A quality stock yields:

1

​​high returns per annum

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2

continuous and rising dividends

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3

low average loss periods

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4

a long look-back period of 1, 2, 3

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The Warren Machine measure condenses all features into one single number. This allows for a straightforward comparison and ranking of stocks. The logic of the metric is to identify the most robust and stable long-term quality stocks on an ongoing basis.

Warren Machine Measure

CompanyImperial BrandsCranswickSouth Jersey​Domino's Pizza

Return (1)​ 18.8%22.6%12.6%​37.8%

Risk (2)12.9%18.5%12.5%12.8%

Dividend (3)5.85%N/A3.35%1.53%

Look-back (4) 17.5 years27.1 years29.0 years​8.3 years

(1) annualized return including dividends over look-back period(2) precise measure of "ruggedness", not standard deviation nor semi-deviation(3) last dividend yield(4) period during which the maximum Warren Machine measure can be observed

Warren Machine Measure​240%240%240%​240%

What are the benefits of the Warren Machine ?

​Find easily the best overlooked investment stories worldwide

​Get quick access to promising research ideas

​Take control of your investments and / or control your investment advisor

An economist strolls down the street with a companion when they come upon a $100 bill lying on the ground. As the companion reaches down to pick it up, the economist says, “Don’t bother—if it were a real $100 bill, someone would have already picked it up.”

Can yesterday's price predict tomorrow's price ?

Nobody knows the future.Stock prices anticipate the future by reflecting today what the investor community knows or believes to be relevant in the future. But next to a speculative factor there are also some hard facts: debt ratios, cash flows, return on equity, profit margins, revenue growth, brand recognition, management qualification and more. Therefore, the best knowledge and most irrational speculation of all investors is aggregated and visible in past

and current stock prices. But the higher the consensus (or the lower the information surprise) among so-called fundamentalists, technicians, informed and uninformed investors the less choppy the price fluctuation of the stock is likely to be. The persistence of high consensus over time qualifies for a high Warren Machine measure. It is an indication that the investor community has identified the company as being a quality stock.

How can the Stock Screener recommend quality stocks?

There are numerous and beautifully designed stock screeners available, some of them for free. The crux with stock screeners is that you determine the criteria to search for. You may face the following challenges:① which criteria are relevant to determine a quality stock with a promising outlook?② is the weighting or importance of all criteria equal? ③ how can immaterial facts (pending patents, litigations, mergers etc. ) be accounted for?④ are the data underlying the selection criteria verified and accurate?

The Stock Recommender reverses the logic. Based on what you are interested in it gives you an immediate answer which competitors in the same industry sector (according to the Thomson-Reuters sector definition) exhibit a more favorable, stable, robust stock price evolution in the past. It shows you alternatives to what you are interested in without specifying which material or immaterial facts are the cause. The investor community may have good reasons and ample knowledge to favor one stock over another. There is obviously no guarantee about the community to be right.

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